12 On 9 October 2006 the Australian Government officially launched the Telstra 3 share offer. The key elements of the offer outlined in the Telstra 3 Share Offer Prospectus (the prospectus) were the Government's decision to offer in the order of $8 billion worth of Telstra stock, with provision for further allocations, and the payment for shares in two instalments, with the first instalment to be paid on application and the final instalment to be paid by 29 May 2008.

13 The T3 share offer concluded on 17 November 2006. The share offer was oversubscribed and in total 4.25 billion shares valued at $15.5 billion were allocated. The final price for retail investors was $3.60 with a first instalment of $2.00 and a final instalment of $1.60. For institutional investors the final price was $3.70 with a first instalment of $2.10 and a final instalment of $1.60.

14 As occurred with the previous T1 and T2 offers, T3 investors were issued with a security known as an instalment receipt. Until payment of the final instalment, the shares will be held in trust with Telstra Sale Company Ltd being the trustee. Holders of an instalment receipt will have the right to receive dividends and direct the trustee how to vote at meetings of Telstra shareholders.

15 With the transfer of shares to the trust, the Australian Government owns about 17% of Telstra, about 34% of the shares are held by the trust and the remaining 49% are held by other shareholders. In the prospectus the Commonwealth announced that its remaining shares would be transferred to the Future Fund by 24 February 2007.

16 As noted in the prospectus, while the Australian Government holds greater than 15% ownership of Telstra then a range of legislative powers reside with the Commonwealth, specifically:

certain obligations to provide financial and other information to the Commonwealth;

the Communications Minister’s power to direct Telstra in the public interest; and

the Finance Minister’s power to direct Telstra not to dilute the Commonwealth’s equity in Telstra or to issue securities or financial products.

17 The transfer of the Australian Government's Telstra shares to the Future Fund will reduce its holding below the 15% threshold and the above powers will no longer apply. While the Future Fund is a separate legal entity from the Australian Government, the ABS treats the fund as part of the Commonwealth general government sector for the purpose of economic statistics. See the March quarter 2006 issue of Government Finance Statistics, Australia (cat. no. 5519.0.55.001) for further details.